Interview with Sonny Africa on IBON’s analysis on the PH economic crisis

Jose Enrique Africa, Ibon Foundation executive director. (Bulatlat file photo)

In this interview, IBON’s Executive Director Jose Enrique “Sonny” Africa” talks about how the economic policies of the Duterte administration have pushed Filipinos further into misery on one hand, and enriched the elite even more on the other hand.


Dr. Rainer Werning: What is behind the abbreviation IBON? How and when did this organization come into being?

Sonny Africa: IBON was set up in 1978 during the Marcos dictatorship. “IBON” is Filipino for bird which is generally known to symbolize freedom and independence – and IBON has from the beginning been about freedom from oppression and independence from foreign powers, among other things to be liberated from. Birds figure prominently as symbols in Christianity so it probably also matters that church workers were among the founders of IBON. The clunky meaning of the abbreviation has long been forgotten even if we still conventionally spell the name in all caps.

RW: What did you do professionally before joining IBON and became its executive director?

SA: I’ve been in one area of development work or the other from the time I started working after finishing university. My first job was in the Philippines’ national planning agency working mainly on transacting government loans from the World Bank and Asian Development Bank. I then spent many years in an NGO that worked with NGOs and people’s organizations across the country on the whole spectrum of community development projects. The long exposure in grassroots communities and, especially, to organized campaigns and people’s struggles gave potent insight and was hugely formative. After this I spent a couple of years as a legislative staff of progressive party-list group Bayan Muna in parliament. The internet was just starting to be used widely and I also helped set up an online news website – the country’s first, actually. This was followed by some years helping organize farmers to tilt the balance of rural power in the countryside. I joined IBON’s research department in 2005 and was eventually appointed executive director.

RW: What are the main activities of IBON at the moment?

SA: IBON has from the very beginning been about promoting an understanding of the economy and society from the standpoint and perspective of the people. This remains the largest part of our work and we do this very closely with the biggest and most important progressive political forces in the country. We would not have lasted this long nor be very meaningful if we did not remain grounded in the organized struggles of farmers and fisherfolk, workers and informal sector workers, youth and students, women, indigenous peoples, and other progressive social reformers. We contribute research and analysis to their campaigns as well as give education and trainings. We also work for progressive ideas to reach as many people as possible through mass media, social media, and engagements with government.

A lesser known part of our work is education work in formal schools, or as opposed to the constant informal education in the mass movement. We produce textbooks, journals and supplementary teaching materials for primary and secondary schools. We also help develop the curriculum of self-organized Lumad indigenous people community schools in Mindanao.

RW: According to Philippine media reports, you as a person and IBON are red-tagged and branded as pro-communist? What exactly are you being accused of and by whom?

SA: The Duterte administration has been trying to destroy IBON’s credibility since the start of 2019. This started with the Office of the President itself questioning our data and analysis, quickly mutated into accusations of supporting and financing terrorism, and then worsened further into accusations of being part of an expansive “Communist-terrorist” plot to overthrow the government through armed means. Our staff have been harassed by military and police agents. Our offices have been surveilled and were almost raided by security forces.

The most active red-taggers of IBON are the two spokespersons of the National Task Force to End Local Communist Armed Conflict (NTF-ELCAC) — Lt. Gen. Antonio Parlade Jr., then also chief of the military’s Southern Luzon Command, and Undersecretary Lorraine Badoy of the Presidential Communications Coordination Office (PCOO). Their accusations are dutifully echoed by the government‘s army of trolls, sycophantic bureaucrats, and propaganda machinery. Parlade recently retired from military service but was appointed Deputy Director-General of the National Security Council.

RW: In your opinion, what distinguishes the current government under Mr. Duterte in a special way compared to his predecessors?

The current government is most of all distinguished by its chief representative being an exemplar of early 21st century authoritarianism. Like many autocrats today, President Duterte is a populist demagogue who gained power through elections and expanded his power through increasingly aggressive rule by law. The way he and others so easily exploit so-called liberal democratic institutions promoted worldwide since the 1980s, and undermining them in the process, actually exposes the deficiencies of such “democracy” as means for the people to take real control of their lives.

RW:  How do you assess the political, economic and social performance of Duterte’s term in office, which has now lasted over five years?

The social, economic and political setbacks under just five years of the Duterte administration are huge.

President Duterte’s theatrics includes using a lot of anti-oligarch, reformist and even nationalist rhetoric but his government is actually deeply committed to neoliberal policies. The result is pretty much as would be expected from a neoliberal policy trajectory – manufacturing’s share in the economy has fallen to as small as in the 1950s and agriculture is down to its smallest share in the country’s history.

Unemployment was at a record high even before the pandemic and has only worsened. Joblessness is actually even worse because the most employment is actually in irregular, low-paying informal work and self-employment.

President Duterte’s aggressively pro-big business agenda has worsened inequality with corporate profits growing at the expense of ordinary wage-workers, and the wealth of the super-rich continuing to bloat even through the pandemic. The neoliberal obsession with fiscal austerity meanwhile means that essential health, education and other public services are provided sparingly and certainly much less than needed by the still overwhelmingly poor and vulnerable population. The government’s miserable COVID-19 response has just made all these tendencies become even worse.

Dutertenomics is actually a potent combination of accustomed neoliberal policies but now combined with populist authoritarianism to enforce and expand them. This has succeeded enormously in making the state’s vast resources and authority be used to promote the profits and interests of large corporations including foreign investors. Income and wealth is steeply and systematically being redistributed in favor of foreign and domestic capitalist elites.

Politically, the state’s attacks on the people today are unprecedented in breadth, depth and severity since at least the open dictatorship of the Martial Law period. Perceived political opponents not just in the mass movement but also in the legislature, judiciary, mass media, churches, and private sector are attacked – inmany case even violently and with impunity. As in other countries, harmful counterterrorism and other security legislation and regulations are put in place and frequently invoked.

The immediate effects are the threats to individuals and organizations. Activism and development work in communities and on policy advocacies are severely disrupted. In the worst instances, activists are shot, stabbed, tortured and killed.

There is however also the great long-term danger of adversely tilting the balance of power towards the state. The ratchet effect of so many legal restrictions is long-lasting and will be hard to roll back. These will have serious implications even after President Duterte leaves office next year.

RW: Can you list some key data regarding the current distribution of income, the profit rates of the largest Philippine companies, and the discrepancy between legally mandated minimum wages and actual payments made?

SA: The 110.1 million Filipinos make the Philippines the 13th largest out of almost 200 countries in the world. This also means that the intrinsic inequality of capitalism affects a huge number of exploited people.

There are some 25 million Filipino families. The poorest 18.7 million families don’t have any savings at all, while for those who do have savings the median bank balance is just P5,000 (US$100). The poorest 1.3 million families are chronically in debt just to subsist.

On the other hand, the richest two percent of families have combined wealth of over P20 trillion (US$400 billion), which is around 40 percent of total wealth and as much as the poorest 80 percent of families have. This is concentrated in some 3,000 billionaires who have over P8 trillion combined, and especially in the richest 50 Filipinos who are each worth anywhere between P10 billion (US$200 million) to as much as P811 billion (US$16.2 billion).

The poorest 18.6 million families (75 percent of families) have a monthly income of P60,000 (US$1,200) at most compared to the richest 143,000 families (top 0.6%) who have monthly incomes of up to P10 million (US$200,000) or much more. But even this masks how deep poverty is for the very poorest – half of the population earns less than P22,000 (US$440) monthly and the poorest 12 percent (2.9 million families) struggle to survive on P11,000 (US$220) or even less.

These only measure income poverty however and the situation of the overwhelming majority of Filipinos also includes lack of proper work, miseducation, ill health, and poor housing with chronic structural violence, vulnerability and exploitation. The National Capital Region (NCR) is home to 13 of the most congested cities on the planet and half of families here squeeze into homes just 2 ½ parking spaces in size or even much smaller.

One of the characteristics of Philippine semifeudal backwardness is its huge informal sector with around three-fourths (72 percent) in fragmented and dispersed agricultural and services activities. This vast informality means being far beyond minimum wage legislation and regulations. Having said that, state-supported wage exploitation is well and truly raging among capitalist enterprises.

Labor productivity is continuously growing as new technologies are applied and as workers are made to produce ever more surplus value for capitalists. Yet the mandated minimum wage in NCR, the highest in the country, in real terms increased by just 3.4 percent between 2006 and 2020. This is among the factors driving the profits of the country’s Top 1000 corporations which more than doubled (143-percent increase) in the same period.

The around 280 firms listed on the Philippine Stock Exchange (PSE) did even better – their profits tripled (196-percent increase) over the same period. As it is, latest official reports note that half (46 percent) of wage and salary workers receive less than the minimum wage and one-fourth (25 percent) receive just exactly the minimum wage which is far too low for any sort of decent living.

Corporate profits are set to soar even higher with the Duterte administration using the pandemic to justify cutting corporate income taxes supposedly to help firms amid the economic crisis. This will increase corporate profits by Php133 billion (US$2.7 billion) just in 2021, most of which will go to the country’s largest corporations and to foreign investors.

RW: There seem to be different statistical agencies in your country. How do you explain this and how should their respective data be evaluated?

SW: The government has recently consolidated its various statistical agencies under a Philippine Statistical Authority (PSA). The PSA is now responsible for compiling the macroeconomic national accounts, conducting all national censuses and surveys, sectoral statistics, and community-based statistics, and consolidating selected administrative records. The PSA is relatively advanced in the sense that there is a large body of statistics on Philippine social and economic indicators that other countries in the region, for instance, do not have or do not come out with as frequently.

The government is a vital source of data if only by virtue of the fact that it is the only entity with the resources and authority to generate national and local data. Data-gathering is extremely expensive and, moreover, many data sources like companies may not be forthcoming with information unless they are obliged to give this.

The biggest problem with the Philippine statistical system is the choice of variables to monitor. Many essential matters are not monitored frequently enough such as on poverty – not just in terms of income but in its many dimensions – or on wages actually received. Other critical data is not monitored at all such as household or family assets and wealth; IBON’s estimates on these come from extrapolating, inferring and deducting from multiple sources.

Statistics are also framed narrowly according to conventional parameters – economic production is measured but not the ecological resources used up, investment statistics hardly distinguish between foreign and domestic capital, foreign trade statistics do not indicate whether the importing/exporting entity is foreign or domestic, and so on.

All this of course only affirms the ideological nature of data- and information-gathering. This also points to the need to be critical about the data at hand, to try and seek out alternative data sources, and to be careful not to inadvertently ignore important aspects of phenomenon just because there is no readily available data on these.

RW: What are the current criteria used by the government to determine, for example, unemployment, underemployment and poverty?

SA: The government uses an absurdly low definition of what it means to be poor or not poor. Official poverty lines are calculated for the country‘s 17 administrative regions and range from P63/day (US$1.30) to P79/day (US$1.60) with an average of P71/day (US$1.40) nationwide. Using these “poverty lines“, the government is saying that the average Filipino only needs P71/day (US$1.40) to meet all of his or her food and non-food needs and to no longer be poor. By this low standard, the government only counts 16.6 percent or 17.6 million of the population, or just 12.1 percent of or three million families, as “poor”. This statistical trickery is the basis for claiming that poverty is falling in the country.

A person is meanwhile considered as unemployed if he or she is in the labor force but is not currently working. One is in the “labor force” if he or she is at least 15 years old and economically active – i.e. seeking pay in cash or kind; thus excluding full-time students, stay-home homemakers, retirees, and the like. “Working” is defined as having worked for even just an hour in the past week. The underemployed are those wanting additional hours of work, an additional job, or a new job with more working hours.

These definitions have a number of implications that prompt using official figures with a critical eye. First, the definition of employment is actually so loose that broad swathes of irregular, uncertain, low-paying and poor quality work that barely gives enough for mere subsistence is counted as work. This bloats “employment” and reduces reported joblessness.
Second, the government even made the definition of unemployment stricter in 2005 and required a jobless person to have looked for work in the last 6 months and to be able to immediately take up work to be officially counted as unemployed. The net effect of this is to greatly reduce the number of officially unemployed.

Because of the changed definition, millions of jobless Filipinos are not considered unemployed and instead considered as just not in the labor force to begin with. We estimate this to almost halve officially reported unemployment and to reduce unemployment rates by up to three to four percentage points. The government has used this changed definition to claim an improving employment situation and to cover up the ravages of neoliberalism on the domestic economy.

RW: Regarding the Manila government’s course to date to effectively address the Covid 19 pandemic, several international and regional economic and research institutes conclude that the Philippines brings up the rear in the entire Asia-Pacific region? What do you think are the underlying factors responsible for this failure?

The stinginess of the Philippine government’s COVID-19 response only reflects how thoroughly the state has internalized its role as prioritizing the interests of capital over the working classes. It is not spending what needs to be spent on COVID-19 containment, health measures, assistance to distressed families and small enterprises, and others. This is because, despite the severe pandemic- and lockdown-driven shock, it does not want the national government deficit to increase and its debt to rise so as to preserve its investment grade credit ratings.

So-called creditworthiness is most of all about ensuring the stable financial flows that foreign and domestic capitalists so desire. This stability gains particular importance because of the Php1.1 trillion (US$22 billion) in infrastructure spending it is still insisting on in 2021 – with trillions of pesos/tens of billions of dollars more in the years to come. Capital flows to finance these have to be assured. Many of these infrastructure projects involve foreign contractors, will stimulate US, Japanese Chinese and European suppliers, and will benefit large transnational corporations in the country. It would be a different matter if these were labor-intensive projects creating work for Filipinos, using Filipino-made inputs, and building infrastructure the domestic economy needs.

The government is also not spending what needs to be spent to be able to have the fiscal room to support the tax cuts on corporate incomes. The P133 billion in corporate income tax cuts literally means P133 billion (US$2.7 billion) less to spend on essential COVID-19 response.
Also, the government has distorted support for distressed families as some kind of voluntary act of charity on its part rather than a responsibility to ensure the welfare of those most badly affected by the pandemic and the reckless lockdowns it is using to try and contain this. There is also the grossly erroneous notion by neoliberals that monetary measures like increasing liquidity are the most effective tools for managing the economy.

RW: How can the economy be revived after the GDP shrank sharply by almost ten percent in 2020?

SA: The immediate challenge is of course to revive the economy from the extreme lockdown-driven collapse last year that persists to this day. The record numbers of hungry, poor and jobless Filipinos since last year has hardly abated. Recovery is best spurred by giving substantial emergency cash assistance to the poorest 70-80 percent of Filipinos. This will both alleviate their situation – valuable for its own sake because they have suffered all these months already – as well as spur economic activity on a wider scale.

The boost to aggregate demand will be all the greater the bigger the fiscal stimulus is. The Philippine economy is about 70 percent consumption-driven with the balance taken up by investments, government, and net exports. The long and harsh lockdowns collapsed consumption most of all so it’s this aspect that needs major attention. And beyond the macroeconomics, collapsing household consumption also means collapsing household welfare that was already at very low levels to begin with.

Beyond mere revival or recovery though is the challenge of initiating structural and long-term reforms. The semifeudal Philippine economy before the pandemic was backward, non-industrialized, foreign- and elite-dominated, poverty-ridden, and unequal. This is not in any way the kind of “normal” that we should aspire to return to.

This interview first appeared in an abridged and updated version in German in the Berlin-based daily newspaper Junge Welt on August 21/22, 2021.The interviewer Dr. Rainer Werning is a German political and social scientist, author of numerous books on East and South East Asian affairs and lecturer at the Academy for International Cooperation (AIZ) in Bonn (Germany).

Disclosure: Sonny Africa is one of the founders of Bulatlat.

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